An individual plans their finances keeping the long haul in mind. Over the years, there are certain goals which they wish to achieve and plan for the same accordingly. While the primary motive is always wealth creation, every individual needs a sense of security; a backup that their family can rely on in any unexpected situation. This is where Life Insurance comes into the picture. Read further to understand how life insurance enables you to achieve your financial goals.
Life insurance and financial goals
Offers a sense of security
When you are planning your finances there would be some products whose outcomes are uncertain and some which have a fixed outcome. Life insurance is one such product that offers a fixed outcome by providing you with a sense of security. When you buy life insurance, you can rest assured that your family is secure in your absence. This allows you to focus on your long-term financial goals without worrying about your family’s security. A life cover acts as a security blanket towards your loved ones in your absence.
Provides opportunities to save taxes
When you are planning your financial goals, one of the primary goals is to save taxes as much as possible. When you buy life insurance, you get to save taxes on multiple levels. The premiums that you pay on your insurance plans are subjected to deductions according to Section 80C of the Income Tax Act. Also, several types of life insurance products offer investment or saving opportunities along with providing a life cover, like a Unit Linked Insurance Plan (ULIP). You can use a life insurance calculator to estimate your premium amount and plan your finances accordingly.
There are several types of life insurance plans that you can choose from based on your needs and goals. Irrespective of the type of plan you choose, you get the option of getting an additional coverage with your base plan. These additional covers are riders which you can choose by paying an additional premium. The common riders that most individuals usually opt for are critical illness cover, guaranteed insurability, waiver of premium, accidental death, family income benefit, and return of premium riders. These riders provide additional benefits and you have to pay an additional premium for them. Use a life insurance calculator to get an estimate of the additional premium you have to pay for the additional coverage you need.
Helps in achieving long-term financial goals
When you are choosing life insurance with a saving or investment component attached to it, you can achieve your long-term goals with ease. It ensures that along with protecting your loved ones, you also get to generate wealth over the long haul. This is because a life insurance policy is a long-term commitment. If you are selecting investments like a Unit Linked Insurance Plan (ULIP), you can choose the funds that you want to put your money into. Over the years, these plans tend to offer substantial returns, since along with earning interest on the principal amount, you also make money over the returns you have earned in the previous years. This is known as compounding; it allows you to multiply your returns in the long haul. When you buy a life insurance policy that has an investment opportunity as well, you achieve two financial goals with a single plan.
Affordable and easy to buy
When you are buying life insurance, the key thing to decide is the coverage amount. When you are planning your long-term goals, you need sufficient funds. Similarly, when you are choosing life insurance, you need sufficient coverage that will suffice for your family in your absence. You also need to consider inflation, since, over the years, the prices of goods and services are likely to increase. For a huge sum assured, one might assume that they would have to pay a hefty premium. However, with term insurance plans, you can get sufficient life cover for an affordable premium. It allows you to secure your family’s future without being too heavy on your pockets.
When you are planning your long-term financial goals, it is vital that you have life insurance. With life insurance, you secure one of the main goals which is protecting your loved ones against uncertainties.